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Tough Times Ahead As Covid-19 Slows Air Cargo Movement

The International Air Transport Association (IATA) yesterday said tough times await global economy as coronavirus disease spread and attendant flight disruptions restrict cargo movement.

IATA said though the February estimates would show the real picture, global freight movement in January already recorded 3.3 percent dip.

Amid worldwide decline, African carriers posted the fastest growth of any region for the 11th consecutive month in January 2020, with an increase in demand of 6.8 percent compared to the same period a year earlier.

Growth on the smaller Africa-Asia trade lanes, up 12.4 percent in 2019, contributed to the positive performance. Capacity grew 5.9 percent year-on-year.

Global air cargo decreased for the tenth consecutive month in January, but not as a result of the covid-19 outbreak.

Tough times are ahead. The course of future events is unclear, but this is a sector that has proven its resilience time and again.

IATA’s Director General and Chief Executive Officer (CEO), Alexandre de Juniac, said January marked the tenth consecutive month of year-on-year declines in cargo volumes, as the air cargo industry started the year on a weak footing.

“There was optimism that an easing of US-China trade tensions would give the sector a boost in 2020. But that has been overtaken by the covid-19 outbreak, which has severely disrupted global supply chains, although it did not have a major impact on January’s cargo performance.

“Tough times are ahead. The course of future events is unclear, but this is a sector that has proven its resilience time and again,” de Juniac said.

The association recently estimated the financial impact of the novel coronavirus, putting the loss at $113 billion.

The new figure was released following a review of financial implications on the public health emergency on the global air transport industry. Just three weeks ago, IATA was expecting lost sales in the range of $30 billion.

The association had said Airlines in Nigeria and other African countries would lose $40 million in revenue this year over flight disruption due to coronavirus spread. The figure is also expected to rise with the spread and new findings.

Asia-Pacific airlines saw demand for air cargo contract by 5.9 percent in January 2020, compared to the year-earlier period. This was the sharpest drop in freight demand of any region for the month. Capacity growth was flat. Seasonally-adjusted cargo demand rose slightly however, following the thawing of US-China trade relations. The impact of covid-19 is expected to affect February’s performance.

North American airlines saw demand decrease by 1.3 percent in January 2020, compared to the same period a year earlier. Capacity increased by 3.4 percent. Seasonally-adjusted cargo demand rose slightly, however, amid a more supportive operating environment and following the thawing of US-China trade relations.

European airlines posted a 3.7 percent decrease in cargo demand in January 2020 compared to the same period a year earlier – more than double the 1.3 percent drop in year-on-year demand in December. Seasonally-adjusted demand also dropped sharply, disrupting the positive trend that started mid-2019. Capacity decreased by 3.0 percent year-on-year.

Middle Eastern airlines’ cargo volumes decreased 1.4 percent in January 2020 compared to the year-ago period. Capacity increased by 2.9 percent. Against a backdrop of operational and geopolitical challenges facing some of the region’s key airlines, seasonally-adjusted freight volumes ticked down in January, but a modest upwards trend has been sustained.

However, given the Middle East’s position connecting trade between China and the rest of the world, the region’s carriers have significant exposure to the impact of covid-19 in the period ahead.

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Written by PH

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